The article states that on Wednesday, August 27, a 50% tariff took effect on Indian goods exported to the U.S., placing India in the highest tariff bracket along with Brazil. This punitive tariff is a penalty for India’s continued purchase of Russian oil. The tariffs are expected to significantly impact about 55% of India’s exports to the U.S., which were valued at $86.5 billion in FY25, potentially dragging them down to $39 billion. According to a report from the Global Trade Research Initiative (GTRI), exports from labor-intensive sectors like apparel, textiles, gems, jewelry, shrimp, carpets, and furniture, which make up 66% of exports to the U.S., are expected to plunge by 70%, dropping to $18.6 billion.
However, the article also notes that despite the hit to merchandise exports, India’s total exports are projected to remain resilient and grow by 2.3% in FY26, reaching $839.9 billion. This resilience is attributed to a projected 5% growth in merchandise exports to countries other than the U.S. and a 10% growth in services exports, led by the IT, business services, and healthcare sectors. India has stood firm on its stance regarding Russian oil and is in a difficult position as the U.S. has linked the tariff decision to India’s trade discussions. The 50% tariff will severely hit MSMEs and threatens thousands of jobs in labor-intensive sectors. The article provides a detailed breakdown of the sectoral impacts, including shrimp (60% tariff), diamonds and jewelry (52.1% tariff), and textiles and apparel (63.9% tariff).